EXHIBIT 12
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (as it may be amended from time to
time, this "Agreement"), is entered into as of December 19, 2003 by and among
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Equity Funding, Inc., a Delaware corporation
("MSDW"), Originators Investment Plan, L.P., a Delaware limited partnership
("OIP"), Augustine Fund LP, an Illinois limited partnership ("Augustine"),
Technology Transformation Venture Fund, LP, a Delaware limited partnership
("TVF"), and ▇▇▇▇ ▇▇▇▇▇▇▇, an individual ("▇▇▇▇▇▇▇"). Collectively, MSDW and OIP
are referred to herein as the "Sellers" and either may be referred to as a
"Seller". Collectively, Augustine, TVF and ▇▇▇▇▇▇▇ are referred to herein as the
"Purchasers" and any of them may be individually referred to as a "Purchaser".
W I T N E S S E T H:
WHEREAS, each Seller is the record and beneficial owners of certain
shares of the Series A Convertible Preferred Stock, par value $0.01 per share
(the "Series A Preferred Stock") and shares of the common stock, par value
$0.0001 per share (the "Common Stock") of Electric City Corp., a Delaware
corporation (the "Company"), and certain warrants to purchase shares of the
Common Stock ("Common Stock Warrants"); and
WHEREAS, each Seller desires to sell certain shares of Series A
Preferred Stock, certain shares of Common Stock and certain Common Stock
Warrants, and each Purchaser desires to purchase some of such securities from
each Seller, in the amounts and for the purchase price and otherwise on the
terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties hereto hereby agree as follows:
ARTICLE 1 - DEFINITIONS
1.1 The following terms when used in this Agreement, including its
preamble and recitals, shall, except where the context otherwise requires, have
the following meanings, such meanings to be equally applicable to the singular
and plural forms thereof:
"Agreement" shall have the meaning set forth in the preamble
of this Agreement.
"Ancillary Agreements" means, collectively, the Investor
Rights Agreement, the Stock Trading Agreement and the Stockholders
Agreement.
"Closing" shall have the meaning set forth in Section 2.3
hereof.
"Closing Date" shall have the meaning set forth in Section 2.3
hereof.
"Commission" means the United States Securities and Exchange
Commission or any other Governmental Authority at the time
administering the Securities Act or the Exchange Act.
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"Commission Documents" shall have the meaning set forth in
Section 4.1(a) hereof.
"Common Stock" has the meaning set forth in the first WHEREAS
clause of this Agreement.
"Common Stock Warrants" has the meaning set forth in the first
WHEREAS clause of this Agreement.
"Company" has the meaning set forth in the first WHEREAS
clause of this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar or successor federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in
effect from time to time.
"Governmental Authority" means the government of any nation,
state or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other
entity owned or controlled, through stock or capital ownership or
otherwise, by any of the foregoing.
"Investor Rights Agreement" means that certain Investor Rights
Agreement dated as of July 31, 2001, by and among the Company and the
other parties thereto, as amended, restated, modified or supplemented
and in effect from time to time.
"Joinder Agreements" means, collectively, the Joinder to
Investor Rights Agreement, the Joinder to Stock Trading Agreement and
the Joinder to Stockholders Agreement.
"Joinder to Investor Rights Agreement" means a Joinder to
Investor Rights Agreement in the form of Exhibit A to this Agreement.
"Joinder to Stock Trading Agreement" means a Joinder to Stock
Trading Agreement in the form of Exhibit B to this Agreement.
"Joinder to Stockholders Agreement" means a Joinder to
Stockholders Agreement in the form of Exhibit C to this Agreement.
"Person" shall mean any individual, partnership, limited
liability company, joint venture, firm, corporation, association, trust
or other enterprise or any government or political subdivision or any
agency, department or instrumentality thereof.
"Placement Agent" means Delano Securities Group, LLC.
"Purchasers" shall have the meaning set forth in the preamble
of this Agreement. "Purchaser" shall mean one of the Purchasers, as
applicable in the context.
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"Securities" means the shares of Series A Preferred, shares of
Common Shares and the Common Stock Warrants which are to be sold by the
Sellers to the Purchasers under this Agreement.
"Securities Act" means the Securities Act of 1933, as amended,
and any similar or successor federal statute, and the rules and
regulations of the Commission thereunder, all as the same may be in
effect from time to time.
"Series A Preferred Stock" has the meaning set forth in the
first WHEREAS clause of this Agreement.
"Stock Trading Agreement" means that certain Stock Trading
Agreement dated as of July 31, 2001, by and among the Company and the
other parties thereto, as amended, restated, modified or supplemented
and in effect from time to time.
"Stockholders Agreement" means that certain Investor Rights
Agreement dated as of July 31, 2001, by and among the Company and the
other parties thereto, as amended, restated, modified or supplemented
and in effect from time to time.
"Transactions" shall have the meaning set forth in Section
3.1(b).
"Warrant Certificate" means a warrant certificate evidencing
Common Stock Warrants, and any replacement certificate issued by the
Company in respect thereof pursuant to transfer and sale of Common
Stock Warrants pursuant to Closing of the Transactions under this
Agreement.
ARTICLE 2 - SALE AND PURCHASE OF SECURITIES
2.1 Sale and Purchase of Securities from MSDW. Subject to the
terms and conditions herein set forth, MSDW hereby agrees to sell to each
Purchaser, and each Purchaser severally for itself only agrees to purchase from
MSDW, at the Closing, the number of shares of Series A Preferred Stock, the
number of shares of Common Stock and the number of Common Stock Warrants, for
the aggregate purchase price, set forth opposite such Purchaser's name on
Schedule I hereto. Each Purchaser's obligations under this Section 2.1 are
expressly not conditioned upon the purchase by any other Purchaser of any of the
Securities that the other Purchasers hereunder have severally agreed to purchase
from MSDW, or on the closing of the sale and purchase of Securities from OIP
contemplated by Section 2.2 hereof, and no default by any Purchaser under this
Section 2.1 or under Section 2.2, or by OIP under Section 2.2, shall excuse any
other Purchaser from performing its obligations under this Section 2.1.
2.2 Sale and Purchase of Securities from OIP. Subject to the terms
and conditions herein set forth, OIP hereby agrees to sell to each Purchaser,
and each Purchaser severally for itself only agrees to purchase from OIP, at the
Closing, the number of shares of Series A Preferred Stock, the number of shares
of Common Stock and the number of Common Stock Warrants, for the aggregate
purchase price, set forth opposite such Purchaser's name on Schedule II hereto.
Each Purchaser's obligations under this Section 2.2 are expressly not
conditioned upon the purchase by any other Purchaser of any of the Securities
that the other
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Purchasers hereunder have severally agreed to purchase from OIP, or on the
closing of the sale and purchase of Securities from MSDW contemplated by Section
2.1 hereof, and no default by any Purchaser under this Section 2.2 or under
Section 2.1, or by MSDW under Section 2.1, shall excuse any other Purchaser from
performing its obligations under this Section 2.2.
2.3 Closing. Subject to the satisfaction or waiver of the
conditions to closing set forth in Article 3, the closing of the purchase and
sale of the Securities (the "Closing") shall take place at 10:00 a.m. Central
Time on December 19, 2003 (the "Closing Date"), at the offices of the counsel
for the Placement Agent, or at such other date, time and/or location as is
mutually agreed upon by the Sellers and the Purchasers.
ARTICLE 3 - CLOSING
3.1 Purchasers' Conditions to Closing With MSDW. Each Purchaser's
obligation to purchase and pay for the Securities to be purchased by such
Purchaser from MSDW at the Closing is subject to the satisfaction (or waiver by
such Purchaser), on or before the Closing Date, of each of the following
conditions:
(a) Receipt of Securities. Such Purchaser shall have
received delivery of stock certificates and Warrant Certificates
evidencing the Securities to be sold to such Purchaser in accordance
with Section 3.6;
(b) No Litigation; No Order. No action, suit or
proceeding relating to the transactions contemplated by this Agreement
(the "Transactions") shall be pending that seeks to restrain or prevent
any of the Transactions, and no order (including, without limitation, a
temporary restraining order), decree, writ, judgment or injunction
shall be in effect that restrains, enjoins or prevents the consummation
of the Transactions;
(c) Representations and Warranties. MSDW's
representations and warranties set forth in this Agreement shall have
been true and correct in all material respects (except to the extent
that any of such representations and warranties is already qualified as
to materiality, in which case, such representations and warranties
shall be true and correct without further qualification) when made and
shall continue to be true and correct in all material respects on the
Closing Date (except, in either case, to the extent that any of such
representations and warranties are specifically made as of a date prior
to the date of this Agreement, in which case such representations and
warranties shall have been true and correct as of the applicable
earlier date(s));
(d) Compliance with this Agreement. MSDW shall have
performed and complied with all of the covenants, agreements and
conditions set forth or contemplated herein that are required to be
performed or complied with by the Company on or before the Closing
Date;
(e) Joinder Agreements. Each of the Joinder Agreements
shall have each been executed and delivered by the parties thereto,
other than the Purchaser.
(f) Consents and Approvals. All consents, waivers,
approvals, exemptions, authorizations, or other actions by, or notices
to, or filings with, any Governmental
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Authority, self-regulatory agency and other Persons necessary or
required in connection with the execution, delivery or performance by
MSDW or enforcement against MSDW of this Agreement in connection with
the consummation of the Transactions shall have been obtained or made
and be in full force and effect.
3.2 MSDW's Conditions to Closing. MSDW's obligation to sell and
transfer the Securities to be sold by it to each Purchaser at the Closing is
subject to the satisfaction (or waiver by MSDW), on or before the Closing Date,
of each of the following conditions:
(a) Receipt of Purchase Price. MSDW shall have received
from such Purchaser payment of the purchase price payable by such
Purchaser by wire transfer of immediately available funds to the
account specified for MSDW on Schedule III hereto;
(b) No Litigation; No Order. No action, suit or
proceeding relating to the Transactions shall be pending that in the
reasonable good faith judgment of MSDW seeks to restrain or prevent any
of the Transactions and has a reasonable probability of success;
(c) Representations and Warranties. Such Purchaser's
representations and warranties set forth in this Agreement shall have
been true and correct in all material respects (except to the extent
that any of such representations and warranties is already qualified as
to materiality, in which case, such representations and warranties
shall be true and correct without further qualification) when made and
shall continue to be true and correct in all material respects on the
Closing Date (except, in either case, to the extent that any of such
representations and warranties are specifically made as of a date prior
to the date of this Agreement, in which case such representations and
warranties shall have been true and correct as of the applicable
earlier date(s));
(d) Compliance with this Agreement. Such Purchaser shall
have performed and complied with all of the covenants, agreements and
conditions set forth or contemplated herein that are required to be
performed or complied with by such Purchaser on or before the Closing
Date;
(e) Joinder Agreements. Each of the Joinder Agreements
shall have each been executed and delivered by the parties thereto,
including each Purchaser.
(f) Consents and Approvals. All consents, waivers,
approvals, exemptions, authorizations, or other actions by, or notices
to, or filings with, any Governmental Authority, self-regulatory agency
and other Persons necessary or required in connection with the
execution, delivery or performance by such Purchaser or enforcement
against such Purchaser of this Agreement in connection with the
consummation of the Transactions shall have been obtained or made and
be in full force and effect.
3.3 Purchasers' Conditions to Closing With OIP. Each Purchaser's
obligation to purchase and pay for the Securities to be purchased by such
Purchaser from OIP at the Closing is subject to the satisfaction (or waiver by
such Purchaser), on or before the Closing Date, of each of the following
conditions:
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(a) Receipt of Securities. Such Purchaser shall have
received delivery of stock certificates and Warrant Certificates
evidencing the Securities to be sold to such Purchaser in accordance
with Section 3.6;
(b) No Litigation; No Order. No action, suit or
proceeding relating to the Transactions shall be pending that seeks to
restrain or prevent any of the Transactions, and no order (including,
without limitation, a temporary restraining order), decree, writ,
judgment or injunction shall be in effect that restrains, enjoins or
prevents the consummation of the Transactions;
(c) Representations and Warranties. OIP's representations
and warranties set forth in this Agreement shall have been true and
correct in all material respects (except to the extent that any of such
representations and warranties is already qualified as to materiality,
in which case, such representations and warranties shall be true and
correct without further qualification) when made and shall continue to
be true and correct in all material respects on the Closing Date
(except, in either case, to the extent that any of such representations
and warranties are specifically made as of a date prior to the date of
this Agreement, in which case such representations and warranties shall
have been true and correct as of the applicable earlier date(s));
(d) Compliance with this Agreement. OIP shall have
performed and complied with all of the covenants, agreements and
conditions set forth or contemplated herein that are required to be
performed or complied with by the Company on or before the Closing
Date;
(e) Joinder Agreements. Each of the Joinder Agreements
shall have each been executed and delivered by the parties thereto,
other than the Purchasers.
(f) Consents and Approvals. All consents, waivers,
approvals, exemptions, authorizations, or other actions by, or notices
to, or filings with, any Governmental Authority, self-regulatory agency
and other Persons necessary or required in connection with the
execution, delivery or performance by OIP or enforcement against OIP of
this Agreement in connection with the consummation of the Transactions
shall have been obtained or made and be in full force and effect.
3.4 OIP's Conditions to Closing. OIP's obligation to sell and
transfer the Securities to be sold by it to each Purchaser at the Closing is
subject to the satisfaction (or waiver by OIP), on or before the Closing Date,
of each of the following conditions:
(a) Receipt of Purchase Price. OIP shall have received
from such Purchaser payment of the purchase price payable by such
Purchaser by wire transfer of immediately available funds to the
account specified for OIP on Schedule III hereto;
(b) No Litigation; No Order. No action, suit or
proceeding relating to the Transactions shall be pending that in the
reasonable good faith judgment of OIP seeks to restrain or prevent any
of the Transactions and has a reasonable probability of success;
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(c) Representations and Warranties. Such Purchaser's
representations and warranties set forth in this Agreement shall have
been true and correct in all material respects (except to the extent
that any of such representations and warranties is already qualified as
to materiality, in which case, such representations and warranties
shall be true and correct without further qualification) when made and
shall continue to be true and correct in all material respects on the
Closing Date (except, in either case, to the extent that any of such
representations and warranties are specifically made as of a date prior
to the date of this Agreement, in which case such representations and
warranties shall have been true and correct as of the applicable
earlier date(s));
(d) Compliance with this Agreement. Such Purchaser shall
have performed and complied with all of the covenants, agreements and
conditions set forth or contemplated herein that are required to be
performed or complied with by such Purchaser on or before the Closing
Date;
(e) Joinder Agreements. Each of the Joinder Agreements
shall have each been executed and delivered by the parties thereto,
including the Purchasers.
(f) Consents and Approvals. All consents, waivers,
approvals, exemptions, authorizations, or other actions by, or notices
to, or filings with, any Governmental Authority, self-regulatory agency
and other Persons necessary or required in connection with the
execution, delivery or performance by such Purchaser or enforcement
against such Purchaser of this Agreement in connection with the
consummation of the Transactions shall have been obtained or made and
be in full force and effect.
3.5 Closing Deliveries by Each Purchaser. At the Closing, each
Purchaser, severally for itself only, shall deliver the following:
(a) the purchase price for the Securities being purchased
by such Purchaser, as set forth on Schedules I and II hereto, by wire
transfer of immediately available funds in the respective amounts
payable to MSDW and OIP to their accounts specified on Schedule III
hereto, which funds will be delivered in consideration of the
Securities being sold to such Purchaser at the Closing by MSDW and OIP,
respectively; and
(d) each of the Joinder Agreements, executed by such
Purchaser.
3.6 Closing Deliveries by the Company. At the Closing, each of
MSDW and OIP shall deliver (or cause the Company to deliver) to each Purchaser
which has complied with its obligations under Sections 3.2, 3.4 and 3.5:
(a) a stock certificate representing the shares of Series
A Preferred Stock being purchased by such Purchaser, registered in the
name of such Purchaser or its nominee(s), as such Purchaser has
specified in writing to the Sellers prior to the Closing;
(b) a stock certificate representing the shares of Common
Stock being purchased by such Purchaser, registered in the name of such
Purchaser or its nominee(s), as such Purchaser has specified in writing
to the Sellers prior to the Closing;
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(c) a Warrant Certificate representing the Common Stock
Warrants being purchased by such Purchaser, registered in the name of
such Purchaser or its nominee(s), as such Purchaser has specified in
writing to the Sellers prior to the Closing; and
(d) each of the Joinder Agreements, executed by MSDW or
OIP, as applicable, and by each of the other parties thereto other than
the Purchasers.
ARTICLE 4 - REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS.
4.1 Purchaser Representations, Warranties and Covenants. Each
Purchaser, severally as to itself only and not jointly as to any other
Purchaser, hereby represents and warrants to the Company, and agrees with the
Company, as follows:
(a) Such Purchaser has received or electronically been given
access to, and has reviewed, copies of the following (collectively, the
"Commission Documents"):
(i) the Company's annual report on Form 10-KSB for the
year ended December 31, 2002 filed with the Commission on March 31,
2003;
(ii) the Company's current report on Form 8-K dated June
3, 2003 filed with the Commission on June 5, 2003;
(iii) the Company's current report on Form 8-K dated June
27, 2003 filed with the Commission on July 2, 2003;
(iv) the Company's quarterly report on Form 10-QSB for the
period ended June 30, 2003 filed with the Commission on August 14,
2003;
(v) the Company's current report on Form 8-K dated
September 11, 2003 filed with the Commission on September 16, 2003;
(vi) the Company's proxy statement for annual meeting of
stockholders to be held on September 24, 2003, mailed to stockholders
on August 29, 2003 and filed with the Commission on August 29, 2003;
(vii) the Company's registration statement on Form SB-2
filed with the Commission on October 20, 2003, as amended by first
amendment thereto filed with the Commission on November 14, 2003; and
(viii) the Company's quarterly report on Form 10-QSB for the
period ended September 30, 2003 filed with the Commission on November
13, 2003.
Such Purchaser understands that no Person has been authorized to give any
information or to make any representations for or on behalf of the Company other
than as set forth in the Commission Documents, and each Purchaser represents and
agrees that it has not relied on any such other information or representations
in making a decision to purchase the Securities which such Purchaser agrees to
purchase hereunder. Such Purchaser represents that such Purchaser has consulted
with its own advisors concerning the purchase of Securities hereunder. Such
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Purchaser understands that an investment in the Company involves a high degree
of risk for the reasons, among others, set forth under the caption "RISK
FACTORS" in the Company's registration statement referred to in clause (vii)
above.
(b) Such Purchaser has also been given copies of and has reviewed
each of the Ancillary Agreements. Such Purchaser understands that it (or, if
applicable, each managed account on whose behalf Securities are being purchased
by such Purchaser) will become a party to and bound by each of the Ancillary
Agreements pursuant to execution and delivery of the Joinder Agreements as
contemplated hereby
(c) Such Purchaser represents that it (or, if applicable, each
managed account on whose behalf Securities are being purchased by such
Purchaser) is a sophisticated investor and an "accredited investor" as defined
in Rule 501 under the Securities Act. Such Purchaser further represents that it
(or, if applicable, each managed account on whose behalf Securities are being
purchased by such Purchaser) has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Securities and making an informed investment decision with
respect thereto, and can bear the economic risk of loss of the entire investment
in the Securities being purchased.
(d) Such Purchaser acknowledges that it has sole responsibility
for its own due diligence investigation and its own investment decision, and
that in connection with its investigation and its investment decision, such
Purchaser has not relied on any representation by or on behalf of the Company
not set forth in the Commission Documents, on the Placement Agent or any Person
affiliated with the Placement Agent, on any representation by or on behalf of
either Seller not set forth in this Agreement, or on the fact that any other
Person has invested or decided to invest in the Securities or in capital stock
of the Company.
(e) Such Purchaser understands and expressly acknowledges and
agrees that none of the Securities has been registered or qualified under the
Securities Act, or under any applicable securities laws of any State of the
United States ("Applicable State Law") and therefore the Securities may not be
offered, sold, transferred, assigned, pledged, hypothecated or otherwise
disposed of, directly or indirectly, unless subsequently registered or qualified
under the Securities Act and under Applicable State Law or unless an exemption
from the registration requirements of the Securities Act and Applicable State
Law is available and an opinion of counsel indicates that such an exemption is
available, in each case to the extent permitted by the terms of this Agreement.
Such Purchaser further understands and acknowledges that the Ancillary
Agreements impose certain further restrictions upon the sale or disposition of
any of the Securities.
(f) Such Purchaser understands and agrees that all certificates
representing the shares of Series A Preferred Stock and Common Stock and all of
the Warrant Certificates acquired by such Purchaser pursuant to this Agreement
shall bear a legend which will be substantially in the form of the following:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF
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1933, AS AMENDED (THE "ACT") OR ANY APPLICABLE STATE
SECURITIES OR "BLUE SKY" LAWS ("APPLICABLE STATE LAW"). THESE
SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED, TRANSFERRED OR
HYPOTHECATED OR OTHERWISE ASSIGNED IN THE ABSENCE OF SUCH
REGISTRATION OR AN OPINION OF COUNSEL, SATISFACTORY TO THE
COMPANY, THAT THERE IS AN EXEMPTION FROM REGISTRATION.
In addition, the certificates representing the shares of Series A Preferred
Stock and Common Stock and all of the Warrant Certificates acquired by such
Purchaser pursuant to this Agreement shall bear the legends required by the
Investor Rights Agreement, the Stock Trading Agreement and the Stockholders
Agreement in accordance with the terms thereof.
(g) Such Purchaser (or, if applicable, each managed account on
whose behalf Securities are being purchased by such Purchaser) will acquire the
Securities pursuant to this Agreement (i) for its own account for investment and
not with a view to, or in connection with, the resale or distribution thereof or
in any arrangement or understanding with any other persons regarding the
distribution of such Securities in violation of the Securities Act, and (ii)
subject to the restrictions set forth in the Ancillary Agreements.
(h) the execution and delivery of this Agreement by such Purchaser
and the performance of this Agreement and the consummation by such Purchaser or
its advisory clients, as the case may be, of the Transactions have been duly
authorized by all necessary action of such Purchaser's directors and
stockholders (if a corporation), partners (if a partnership) or members and
managers (if a limited liability company) and, if applicable, such Purchaser's
advisory clients; and this Agreement, when duly executed and delivered by such
Purchaser, will constitute a valid and legally binding instrument, enforceable
in accordance with its terms against such Purchaser or any of its advisory
clients, as the case may be; except as the enforceability thereof may be limited
by (i) bankruptcy, insolvency, moratorium and other laws affecting the rights
and remedies of creditors and secured parties, and (ii) rules of law governing
specific performance, injunctive relief or other equitable remedies and by
general principles of equity.
(i) Such Purchaser represents that:
(i) If such Purchaser is a corporation, it is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation, with all requisite
power and authority to perform its obligations under this Agreement and
the Ancillary Agreements and the Joinder Agreements. If such Purchaser
is a limited liability company, it is a limited liability company duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization or formation, with all requisite power
and authority to perform its obligations under this Agreement and the
Ancillary Agreements and the Joinder Agreements. The person executing
this Agreement on behalf of such Purchaser is authorized to act for
such Purchaser in purchasing the Securities and executing and delivery
this Agreement and the Joinder Agreements.
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(ii) If such Purchaser is a corporation acting in an
advisory capacity, it is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation, with full power and authority (corporate and other) to
act on behalf of its advisory clients under this Agreement and the
Ancillary Agreements and the Joinder Agreements. If such Purchaser is a
limited liability company acting in an advisory capacity, it is a
limited liability company duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization or
formation, with full power and authority (limited liability company and
other) to act on behalf of its advisory clients under this Agreement
and the Ancillary Agreements and the Joinder Agreements.
(iii) If such Purchaser is a trust, the trustee thereunder
has been duly appointed as trustee of such Purchaser with full power
and authority to act on behalf of such Purchaser and to perform the
obligations of such Purchaser under this Agreement and the Ancillary
Agreements and the Joinder Agreements. Furthermore, the trustee under
such trust has independently determined that the purchase of the
Securities to be purchased by such Purchaser is a suitable investment
for such trust as authorized by the terms thereof and applicable laws
and regulations.
(iv) If such Purchaser is a limited partnership, it is a
limited partnership duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, with
full power and authority to perform its obligations under this
Agreement and the Ancillary Agreements and the Joinder Agreements.
(v) If such Purchaser is a limited partnership acting in
an advisory capacity, it is a limited partnership duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its organization, with full power and authority to act
on behalf of its advisory clients under this Agreement and the
Ancillary Agreements and the Joinder Agreements.
(vi) If such Purchaser is a corporation, limited liability
company, partnership, trust or other form of business entity, the
execution and delivery of this Agreement and the Ancillary Agreements
and the Joinder Agreements by such Purchaser will not contravene or
result in a default under any provision of existing law or regulation
to which such Purchaser is subject, the provisions of its trust
instrument, charter, by-laws or other governing documents or any
indenture, mortgage or other agreement or instrument to which it is a
party or by which it is bound and does not require on its part any
approval, authorization, license or filing from or with any foreign,
federal, state or municipal board or agency which has not been obtained
or duly made.
(vii) If such Purchaser is an individual, he or she has
full power and authority to perform his or her obligations under this
Agreement and the Ancillary Agreements and the Joinder Agreements.
(j) No state, federal or foreign regulatory approvals, permits,
licenses or consents or other contractual or legal obligations are required for
such Purchaser to enter into this Agreement or otherwise purchase the Securities
to be purchased by such Purchaser.
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(k) Special Covenant and Voting Agreement. As an additional
inducement to the Sellers hereto to enter into this Agreement, each of the
Purchasers, severally for itself or himself, hereby agrees with the Sellers
that, in the event that the Company at any time seeks the approval of the
holders of outstanding Series A Preferred Stock, and any necessary consents
pursuant to the Investor Rights Agreement, the Stock Trading Agreement and/or
the Stockholders Agreement in order to effect a transaction in which holders of
any shares of Series A Preferred Stock, with or without the participation of
holders of other shares of preferred stock of the Company, may either:
(i) participate in the redemption of some of their shares
of Series A Preferred Stock for cash and concurrently exchange their
remaining shares of Series A Preferred Stock for shares of a new series
of the Company's convertible preferred stock which will have a lower
dividend rate per annum (payable, at the election of the Company, in
cash or additional shares of such new series of convertible preferred
stock), or
(ii) to exchange all of their shares of Series A Preferred
Stock for shares of a different new series of the Company's convertible
preferred stock which will have a dividend rate of 10% per annum
(payable, at the election of the Company, in cash or additional shares
of such new series of convertible preferred stock) and otherwise be
similar in terms to the other new series of convertible preferred stock
having the lower dividend rate;
(a "Redemption and Exchange Transaction"), then (i) in connection with any vote,
approval or written consent of the holders of shares of Series A Preferred Stock
or the parties to the Stock Trading Agreement, the Stockholders Agreement and/or
the Investor Rights Agreement pertaining to such proposed Redemption and
Exchange Transaction, each of the Purchasers shall vote or otherwise grant its
approval or written consent in favor of such proposed Redemption and Exchange
Transaction if each other holder of Series A Preferred Stock grants its approval
or written consent thereto.
In addition, each of the Purchasers, severally for itself or himself, agrees
with the Sellers that if a Redemption and Exchange Transaction is closed prior
to February 1, 2004, that each Purchaser will elect to exchange all of its or
his shares of Series A Preferred Stock for shares of a different new series of
the Company's convertible preferred stock which will have a dividend rate of 10%
per annum (payable, at the election of the Company, in cash or additional shares
of such new series of convertible preferred stock), as described in and
contemplated by clause (ii) above of this Section 4.1(k).
4.2 Each Seller's Representations, Warranties and Covenants. Each
of the Sellers, for severally for itself and not jointly, hereby represents and
warrants to each Purchaser, and agrees with each Purchaser, as follows:
(a) Such Seller has been duly organized and is validly existing in
good standing under the laws of the jurisdiction of its organization, with the
requisite power and authority to perform its obligations under this Agreement
and to consummate the Transactions on its part contemplated hereby.
(b) The execution, delivery and performance of this Agreement by
such Seller and the consummation by such Seller of the Transactions on its part
contemplated hereby have been duly authorized by all necessary corporate or
partnership action of such Seller and this Agreement has been duly executed and
delivered by such Seller and constitutes a valid and legally binding obligation
of such Seller, enforceable in accordance with its terms, except as the
enforceability thereof may be limited by (i) bankruptcy, insolvency, moratorium
and other laws affecting the rights and remedies of creditors and secured
parties, and (ii) rules of law governing
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EXHIBIT 12
specific performance, injunctive relief or other equitable remedies and by
general principles of equity.
(c) The execution and delivery by such Seller of this Agreement
and the consummation by such Seller of the Transactions on its part herein
contemplated do not (i) violate the certificate of incorporation or limited
partnership certificate (as applicable) of such Seller, or the By-Laws or
agreement of limited partnership (as applicable) of such Seller, or (ii) result
in a material violation of any applicable statute or any order, judgment,
decree, rule or regulation of any court or Governmental Authority having
jurisdiction over such Seller or any of its assets; and (iii) no consent,
approval, authorization, order, registration or qualification of or with any
such court or Governmental Authority is required for the valid authorization,
execution, delivery and performance by such Seller of this Agreement, or the
consummation by such Seller of the other transactions on its part contemplated
by this Agreement, except for such consents, approvals, authorizations,
registrations or qualifications as have been obtained prior to execution of this
Agreement by such Seller or as will be applicable upon execution of the Joinder
Agreements by all parties thereto, including the Purchasers.
(d) The Securities to be sold by such Seller to each Purchaser
pursuant to this Agreement will be sold and delivered at Closing to each
Purchaser free and clear of any liens, security interests or other encumbrances
whatsoever, other than (i) restrictions applicable under the Ancillary
Agreements, and (ii) restrictions generally applicable under state and federal
securities laws.
4.3 Survival of Representations, Warranties and Agreements.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Sellers and
the Purchasers herein shall survive the execution of this Agreement, the
delivery to the Purchasers of the Securities and the payment therefore.
ARTICLE 5 - MISCELLANEOUS
5.1 Fees and Expenses. Each of the parties hereto shall be
responsible for their own expenses incurred in connection with the negotiation
and Closing of the purchase and sale of Securities contemplated hereby.
5.2 Binding Agreement; Assignment. This Agreement shall be binding
upon, and shall inure solely to the benefit of, each of the parties hereto, and
each of their respective heirs, executors, administrators, successors and
permitted assigns, and no other person shall acquire or have any right under or
by virtue of this Agreement. No Purchaser may assign any of its rights or
obligations hereunder to any other person or entity without the prior written
consent of each of the Sellers.
5.3 Entire Agreement. This Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matter hereof and
may be amended only by written execution by all parties.
5.4 Governing Law; Consent To Jurisdiction; Prevailing Party Legal
Fees and Expenses. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED
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EXHIBIT 12
BY, THE LAWS OF THE STATE OF NEW YORK. FURTHERMORE, EACH PARTY HERETO HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS
AND THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF ILLINOIS IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
IN THE EVENT OF ANY LEGAL PROCEEDING CONCERNING ANY DISPUTE AMONG ANY
OF THE PARTIES TO THIS AGREEMENT ARISING OUT OF OR RELATING TO THIS AGREEMENT,
THE PREVAILING PARTY OR PARTIES IN SUCH PROCEEDING SHALL BE ENTITLED TO RECOVER
REASONABLE ATTORNEYS' FEES AND EXPENSES FROM THE NON-PREVAILING PARTY OR
PARTIES.
5.5 Notices. All notices, requests, consents and other
communication hereunder shall be in writing, shall be mailed by first class
registered or certified mail, or nationally recognized overnight express courier
postage prepaid, and shall be deemed given when so mailed and shall be delivered
as addressed as follows:
if to either of the Sellers, to: c/o Morgan ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Equity
Funding, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
if to Augustine, to: Augustine Fund LP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
if to TTVF, to: Technology Transformation Venture Fund LP
c/o Custer Management Inc.
▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
If to ▇▇▇▇▇▇▇, to: ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
or to such other address as any party hereto shall designate to the other
parties in writing in accordance herewith.
5.6 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be deemed but one and the same instrument and
each of which shall be deemed an original, and it shall not be necessary in
making proof of this Agreement to produce or account for more than one such
counterpart for each of the parties hereto. Delivery by facsimile by any of the
parties hereto of an executed counterpart of this Agreement shall be effective
as an original executed counterpart hereof and shall be deemed a representation
that an original executed counterpart hereof will be delivered.
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EXHIBIT 12
5.7 Headings. The descriptive headings of the several paragraphs
of this Agreement are inserted for convenience only and do not constitute a part
of this Agreement.
5.8 Confidentiality. Each party hereto hereby agrees that he or it
will not publicly disclose, and will not include in any public announcement, the
existence of or any of the terms of this Agreement without the prior written
consent of each of the other parties, unless such disclosure is required by law
or applicable regulation, and then only to the extent of such requirement.
Notwithstanding the foregoing, the parties agree that the existence of this
Agreement and its terms may be disclosed to the Company and to the other parties
to the Investor Rights Agreement, the Stock Trading Agreement and the
Stockholders Agreement.
[Balance of page intentionally left blank; signature pages follow.]
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EXHIBIT 12
IN WITNESS WHEREOF, the parties have executed this Securities Purchase
Agreement as of the date first above written.
SELLERS: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
EQUITY FUNDING, INC.
By:_________________________________________
Name:_______________________________________
Title:______________________________________
ORIGINATORS INVESTMENT PLAN,
L.P.
By:_________________________________________
Name:_______________________________________
Title:______________________________________
PURCHASERS: AUGUSTINE FUND LP
By:_________________________________________
Name:_______________________________________
Title:______________________________________
TECHNOLOGY TRANSFORMATION
VENTURE FUND, LP
By:_________________________________________
Name:_______________________________________
Title:______________________________________
____________________________________________
▇▇▇▇ ▇▇▇▇▇▇▇
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EXHIBIT 12
SCHEDULE I
SECURITIES TO BE SOLD BY MSDW
Shares of Series Shares of Common Aggregate
Purchaser A Preferred Stock Common Stock Warrants Purchase Price
--------- ----------------- --------- -------------- --------------
Augustine
Fund LP 104,500 20,956 195,938 $ 1,045,000
Technology
Venture
Fund LP 23,750 4,763 44,531 $ 237,500
▇▇▇▇
▇▇▇▇▇▇▇ 23,750 4,763 44,531 $ 237,500
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EXHIBIT 12
SCHEDULE II
SECURITIES TO BE SOLD BY OIP
Shares of Series Shares of Common Aggregate
Purchaser A Preferred Stock Common Stock Warrants Purchase Price
--------- ----------------- --------- -------------- --------------
Augustine
Fund LP 5,500 1,102 10,312 $55,000
Technology
Venture
Fund LP 1,250 251 2,344 $12,500
▇▇▇▇
▇▇▇▇▇▇▇ 1,250 251 2,344 $12,500
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EXHIBIT 12
SCHEDULE III
PAYMENT INSTRUCTIONS
Payments to MSDW: Citibank NY
ABA No: 021-000089
Acct Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Acct # : 38896527
Ref : Electric City
Payments to OIP: Citibank NY
ABA No: 021-000089
Acct Name: Originators Investment Plan L.P.
Acct # : 30421543
Ref : Electric City
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